The Big Winners

Digital payment platforms have welcomed the government’s efforts to move to a cashless economy. After all, they’ve everything to win, and little to lose. 

- Tania Kishore Jaleel

AS PRODUCT PROMOTIONS GO, few can beat Prime Minister Narendra Modi’s dinner-time announcement on Nov. 8 last year outlawing all Rs 500 and Rs 1,000 notes overnight. After announcing that some 86% of the value of all the cash in the country was effectively useless, there was some solace: “in this entire exercise, there is no restriction of any kind on non-cash payments”, he said. In less than 20 days, in his monthly radio address Mann ki Baat, Modi was calling for a “cashless society”, saying “if we can make a start with a less-cash society, a cashless society will not be a far-off destination”.

Between the two speeches, digital wallet providers were on song. On Nov. 9, most English newspapers boasted a front page advertisement, in which digital payments provider Paytm congratulated Modi “on taking the boldest decision in the financial history of independent India”. The company’s use of Modi’s photograph in the ad effectively made the Prime Minister its brand ambassador. A couple of months before this, Reliance Jio, the long-awaited mobile and data service from Reliance Industries, featured Modi in its series of front-page ads.

Data service providers are among the biggest beneficiaries of Modi’s demonetisation announcement (read about that on page 60). Talking of data, an increase in the user base of digital payment companies will mean an increase in consumption of data. A recent report by Google and Boston Consulting Group (BCG) estimates that the customer base for digital payments is set to increase from 60 million-80 million users now to 300 million by 2020. Digital payments users will comprise 50% of all Internet users by 2020, and the top 100 million Internet users will drive more than 70% of the value of transactions through digital payments instruments.